REGULATORY MATTERS (Tables)

3 Months Ended

Mar. 31, 2024

Regulated Operations [Abstract]

Schedule of PPFAC Regulatory Asset (Liability) Balance

The table below summarizes the PPFAC regulatory asset (liability) balance:

	Three Months Ended March 31,
(in millions)	2024		2023
Beginning of Period	$	55	$	124
Deferred Fuel and Purchased Power Costs (1)	49		58
PPFAC and Base Power Recoveries	(97)		(64)
End of Period	$	7	$	118

(1)Includes costs eligible for recovery through the PPFAC and base power rates.

Schedule of Regulatory Assets and Liabilities

Regulatory assets and liabilities recorded on the Condensed Consolidated Balance Sheets are summarized in the table below:

($ in millions)	Remaining Recovery Period (years)	March 31, 2024		December 31, 2023
Regulatory Assets
Pension and Other Postretirement Benefits (Note 7)	Various	$	106	$	107
Early Generation Retirement Costs	Various	47		48
Derivatives (Note 8)	6	40		26
Lost Fixed Cost Recovery	1	33		35
Property Tax Deferrals (1)	1	30		30
Final Mine Reclamation and Retiree Healthcare Costs (2)	16	21		6
Under-Recovered Purchased Energy Costs	1	7		55
Income Taxes Recoverable through Future Rates (3)	Various	6		6
Unamortized Loss on Reacquired Debt	Various	5		5
Other Regulatory Assets	Various	14		12
Total Regulatory Assets		309		330
Less Current Portion	1	113		147
Total Noncurrent Regulatory Assets		$	196	$	183

Regulatory Liabilities
Income Taxes Payable through Future Rates (3)	Various	$	225	$	229
Net Cost of Removal (4)	Various	132		130
Renewable Energy Standard	Various	76		77
Derivatives (Note 8)	6	28		28
Demand Side Management	1	10		9
Deferred Investment Tax Credits	Various	6		6
Pension and Other Postretirement Benefits (Note 7)	Various	4		4
Transmission Revenue Requirement Balancing Account	1	2		5
Other Regulatory Liabilities	Various	—		1
Total Regulatory Liabilities		483		489
Less Current Portion	1	92		93
Total Noncurrent Regulatory Liabilities		$	391	$	396

(1)Recorded as a regulatory asset based on historical ratemaking treatment allowing regulated utilities recovery of property taxes on a pay-as-you-go or cash basis. TEP records a liability to reflect the accrual for financial reporting purposes and an offsetting regulatory asset to reflect recovery for regulatory purposes.

(2)Represents costs associated with TEP’s jointly-owned facilities at San Juan and Four Corners. TEP recognizes these costs at future value and is permitted to fully recover these costs on a pay-as-you-go basis through the PPFAC mechanism. Final mine reclamation costs are expected to be funded by TEP through 2040. San Juan Unit 1 was retired in 2022. In March 2024, the San Juan reclamation oversight committee approved a new final mine reclamation study which resulted in a $15 million increase in the final mine reclamation regulatory asset.

(3)Amortized over five years, 10 years, or the lives of the assets.

(4)Represents an estimate of the future cost of retirement, net of salvage value. These are amounts collected through revenue for transmission, distribution, generation, and general and intangible plant which are not yet expended.